Subtitles section Play video Print subtitles Let’s say you save your quarters in a piggy bank that you keep on the shelf in your bedroom. But your mom keeps checking up on how much you’re putting in and taking out. You don't like that, so what you need is a second piggy bank that you keep somewhere else. Your friend Johnny’s mom is busy and she doesn’t have time checking on piggy banks. You bring your spare bank over there and money can come and go without anyone being the wiser. But maybe Johnny’s mom isn’t really “too busy.” Maybe she’s just lazy. Maybe she’s deliberately telling the neighborhood that for a small fee, she’ll safeguard their piggy banks and not pay attention to what happens. That what countries like Panama and the Cayman Islands and other tax havens do. They have very weak regulations in terms of watching when money is coming into or out of bank accounts. And they have rules that make it easy to form a corporation without disclosing who owns it. So basically everyone gets to write a fake name on their piggy bank. There's a Panamanian law firm called Mossack Fonseca. They've got over 40 offices in dozens of countries around the world. They specialize in setting up these kind of special piggy banks. They’re called “shell companies” — hollow vessels that don’t conduct any business, they just own financial assets on behalf of their real owners. There's been this massive leak of over 2 terabytes worth of Mossack Fonseca documents to the International Consortium of Investigative Journalists. And it sheds an unprecedented light on the world of shell companies. People can use shell companies for legitimate reasons — sometimes you just need privacy. But they’re also useful for covering up scandalous or embarrassing information. The Panama Papers show that close associates of Vladimir Putin have taken over $2 billion in assets owned by offshore shell companies. And that the prime minister of Iceland actually held financial interests in bankrupt Icelandic banks even as he was simultaneously involved in political negotiations over what should be done with the banks. And the main use of offshore shell companies is avoiding taxes — because the government can’t tax money it can’t find. One of the memos says “95 percent of our work coincidentally consists in selling vehicles to avoid taxes." These tax havens are generally small countries that could be persuaded to clean up their act, but so far political leaders in the big countries haven’t wanted to do it.